Shell’s dividend payment
In the previous part, we looked at Royal Dutch Shell’s (RDS.A) plan to cancel its scrip dividend program. However, this change will not be applicable to the company’s 3Q17 dividends, which will be paid in the fourth quarter of 2017.
In 4Q17, Shell’s gross dividend payment stands at $0.94 per share (or ADS), which would retain the scrip election option. The dividend paid in 4Q17 has remained steady over the dividend paid in 4Q15. The 3Q17 dividend was announced on November 2, 2017, and is scheduled to be paid on December 20, 2017.
Wall Street analysts expect Shell’s dividend payment to stay flat quarter-over-quarter in 1Q18, to $0.94 per share. However, with the cancellation of scrip dividend program, Wall Street analysts could change their estimates.
Business environment in 4Q17
Shell’s 4Q17 dividends, which will be paid in 1Q18, will be cash dividends. Let’s look at the business environment in 4Q17.
In 4Q17 quarter-to-date, energy companies are experiencing a mixed trend in the upstream and the downstream segments. Oil prices, which impact the upstream segment, have risen quarter-over-quarter in 4Q17. However, refining margins, which affect the downstream segment, have fallen quarter-over-quarter in 4Q17.
Average WTI prices have risen 13.0% quarter-over-quarter to $54.00 per barrel in 4Q17 quarter-to-date. However, the US Gulf Coast WTI (West Texas Intermediate) 3-2-1, a benchmark crack, has fallen 9.0% quarter-over-quarter to $19.00 per barrel in 4Q17 quarter-to-date.
Shell’s current dividend yield stands at 5.9%, down from its 4Q15 dividend yield of 6.9%. This decline is led by a steep rise in Shell’s stock price since 4Q15.
BP’s (BP) dividend yield fell from 7.4% in 4Q15 to its current level of 6.0%. Plus, Chevron’s (CVX) dividend yield fell from 4.7% to 3.6% during this timeframe. Statoil (STO) saw a decline in its yield from 5.8% to 4.3% in the same period.
The SPDR S&P 500 ETF’s (SPY) dividend yield decreased from 2.0% in 4Q15 to its current level of 1.8%.